SYDNEY (AFP) - Australian unemployment fell below 6 per cent in March, official data revealed on Thursday, surprising analysts who had expected a higher figure and raising hopes that the jobless rate may have peaked.
The Australian Bureau of Statistics said unemployment dropped from a revised 6.1 percent in February to 5.8 per cent aided by a 40,200 lift in part-time positions, which offset a fall in full-time jobs. "The number of people employed increased by 18,100 to 11,553,200 in March," the bureau said.
With unemployment expected to rise this year as a decade-long mining boom moves out of the construction phase, ANZ chief economist Ivan Colhoun said the data was encouraging. "The Australian economy has improved a bit in the last three to six months," Mr Colhoun said. "I think the re-balancing is definitely happening. We can see housing approvals and construction strengthening, we can see consumer spending strengthening a bit, we can see job ads improving... we can even see some better signs from non-mining investment intentions.
"There are encouraging signs."
The jobs data helped the Australian dollar jump to 94.40 US cents, while shares in Sydney were up 0.45 per cent.
Chief economist at AMP Capital Shane Oliver said the jobs figures were well ahead of market expectations and surprisingly strong given a gain in jobs in February with employment now up 1.1 per cent from a year ago.
But he said given volatility in monthly jobs figures it was better to focus on the trend which was showing monthly jobs growth of around 14,000 and unemployment rising only very slowly.
"Overall our assessment is that the Australian jobs market is not quite as strong as the last two months' data suggests but it's much better than all the headlines about job layoffs imply," he said.
Thousands of future job losses have been announced in recent months, with the country's car manufacturers Ford, Toyota and General Motors Holden all set to close their plants in coming years.
Mr Oliver, however, said there was "some chance" that Australia may have already seen the peak in unemployment.
"This is all consistent with a gradual improvement in economic growth this year in Australia," he added, saying that the central bank would likely raise interest rates this year from the historic low of 2.5 per cent.
"We see no reason to change our expectation for a rate hike in September/October, with the risk of another rate cut now almost zero," Mr Oliver said.
The Reserve Bank of Australia said in its February statement that it was likely that employment growth "will be only moderate over the coming year and the unemployment rate will continue to edge higher".
Economists at Westpac said on Thursday they were still forecasting the unemployment rate to peak at 6.5 per cent late in 2014.
"With a stable participation rate, we estimate the Australian economy has to add 20,000 jobs per month just to hold the unemployment rate steady," Westpac said in a statement.
"However, if there is a resumption of the trend decline in participation then the requirement is much less than that. If this is the case, then it is possible we may have seen the peak in the unemployment rate."